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Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 168501

January 31, 2011

ISLRIZ TRADING/VICTOR HUGO LU, Petitioner,


vs.
EFREN CAPADA, LAURO LICUP, NORBERTO NIGOS, RONNIE ABEL, GODOFREDO
MAGNAYE, ARNEL SIBERRE, EDMUNDO CAPADA, NOMERLITO MAGNAYE and ALBERTO
DELA VEGA, Respondents.
DECISION
DEL CASTILLO, J.:
We reiterate in this petition the settled view that employees are entitled to their accrued salaries
during the period between the Labor Arbiters order of reinstatement pending appeal and the
resolution of the National Labor Relations Commission (NLRC) overturning that of the Labor Arbiter.
Otherwise stated, even if the order of reinstatement of the Labor Arbiter is reversed on appeal, the
employer is still obliged to reinstate and pay the wages of the employee during the period of appeal
until reversal by a higher court or tribunal. In this case, respondents are entitled to their accrued
salaries from the time petitioner received a copy of the Decision of the Labor Arbiter declaring
respondents termination illegal and ordering their reinstatement up to the date of the NLRC
resolution overturning that of the Labor Arbiter.
This Petition for Review on Certiorari assails the Decision1 dated March 18, 2005 of the Court of
Appeals (CA) in CA-G.R. SP No. 84744 which dismissed the petition for certiorari before it, as well
as the Resolution2 dated June 16, 2005 which denied the motion for reconsideration thereto.
Factual Antecedents
Respondents Efren Capada, Lauro Licup, Norberto Nigos and Godofredo Magnaye were drivers
while respondents Ronnie Abel, Arnel Siberre, Edmundo Capada, Nomerlito Magnaye and Alberto
Dela Vega were helpers of Islriz Trading, a gravel and sand business owned and operated by
petitioner Victor Hugo Lu. Claiming that they were illegally dismissed, respondents filed a Complaint 3
for illegal dismissal and non-payment of overtime pay, holiday pay, rest day pay, allowances and
separation pay against petitioner on August 9, 2000 before the Labor Arbiter. On his part, petitioner
imputed abandonment of work against respondents.
Proceedings before the Labor Arbiter and the NLRC
On December 21, 2001, Labor Arbiter Waldo Emerson R. Gan (Gan) rendered a Decision4 in this
wise:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Declaring respondent ISLRIZ TRADING guilty of illegal dismissal.

2. Ordering respondent to reinstate complainants to their former positions without


loss of seniority rights and the payment of full backwages from date of dismissal to
actual reinstatement which are computed as follows: (As of date of decision);
1. EFREN CAPADA
2. LAURO LICUP
3. NORBERTO NIGOS
4. RONNIE ABEL
5. GODOFREDO MAGNAYE
6. ARNEL SIBERRE
7. EDMUNDO CAPADA
8. NOMERLITO MAGNAYE
9. ALBERTO DELA VEGA

P 102,400.00 (6,400.00X16)
87,040.00 (5,440.00X16)
87,040.00 (5,440.00X16)
76,800.00 (4,800.00X16)
102,400.00 (6,400.00X16)
51,200.00 (3,200.00X16)
76,800.00 (4,800.00X16)
76,800.00 (4,800.00X16)
51,200.00 (3,200.00X16)

3. Ordering respondent to pay complainants 10% of the total monetary award as


attorneys fees.
All other claims are dismissed for lack of merit.
SO ORDERED.5
Aggrieved, petitioner appealed6 to the NLRC which granted the appeal. The NLRC set aside the
Decision of Labor Arbiter Gan in a Resolution7 dated September 5, 2002. Finding that respondents
failure to continue working for petitioner was neither caused by termination nor abandonment of
work, the NLRC ordered respondents reinstatement but without backwages. The dispositive portion
of said Resolution reads as follows:
WHEREFORE, premises considered, the appeal is GRANTED and the Decision dated 21 December
2001 is hereby ordered SET ASIDE.
A New Decision is hereby rendered finding that the failure to work of complainants-appellees is
neither occasioned by termination (n)or abandonment of work, hence, respondents-appellants shall
reinstate complainants-appellees to their former positions without backwages within ten (10) days
from receipt of this Resolution.
SO ORDERED.8
Respondents filed a Motion for Reconsideration9 thereto but same was likewise denied in a
Resolution10 dated November 18, 2002. This became final and executory on December 7, 2002. 11
On December 9, 2003, however, respondents filed with the Labor Arbiter an Ex-Parte Motion to Set
Case for Conference with Motion.12 They averred therein that since the Decision of Labor Arbiter Gan
ordered their reinstatement, a Writ of Execution13 dated April 22, 2002 was already issued for the
enforcement of its reinstatement aspect as same is immediately executory even pending appeal. But
this notwithstanding and despite the issuance and subsequent finality of the NLRC Resolution which
likewise ordered respondents reinstatement, petitioner still refused to reinstate them. Thus,
respondents prayed that in view of the orders of reinstatement, a computation of the award of
backwages be made and that an Alias Writ of Execution for its enforcement be issued.

The case was then set for pre-execution conference on January 29, February 24 and March 5, 2004.
Both parties appeared thereat but failed to come to terms on the issue of the monetary award.
Hence, the office of the Labor Arbiter through Fiscal Examiner II Ma. Irene T. Trinchera (Fiscal
Examiner Trinchera) issued an undated Computation14 of respondents accrued salaries from
January 1, 2002 to January 30, 2004 or for a total of 24.97 months in the amount of P1,110,665.60
computed as follows:
Accrued Salary from January 1, 2002 to January 30, 2004 = 24.97 months
1. Efren Capada P 6,400.00 x 24.97 months

P 159,808.00

2. Lauro Licup P 5,440.00 x 24.97 months

P 135,836.80

3. Norberto Nigos P 5,440.00 x 24.97 months

P 135,836.80

4. Ronnie Abel P 4,800.00 x 24.97 months

P 119,856.00

5. Godofredo Magnaye P 6,400.00 x 24.97 months

P 159,808.00

6. Arnel Siberre P 3,200.00 x 24.97 months

P 79, 904.00

7. Edmundo Capada P 4,800.00 x 24.97 months

P 119, 856.00

8. Nomerlito Magnaye P 4,800.00 x 24.97 months

P 119, 856.00

9. Alberto de la Vega P 3,200.00 x 24.97 months


Total

P 79, 904.00
P 1,110,665.60

Petitioner questioned this computation in his Motion/Manifestation15 claiming that said computation
was without any factual or legal basis considering that Labor Arbiter Gans Decision had already
been reversed and set aside by the NLRC and that therefore there should be no monetary award.
Nevertheless, Labor Arbiter Danna M. Castillon (Castillon) still issued a Writ of Execution 16 dated
March 9, 2004 to enforce the monetary award in accordance with the abovementioned computation.
Accordingly, the Sheriff issued a Notice of Sale/Levy on Execution of Personal Property 17 by virtue of
which petitioners properties were levied and set for auction sale on March 29, 2004. In an effort to
forestall this impending execution, petitioner then filed a Motion to Quash Writ of Execution with
Prayer to Hold in Abeyance of Auction Sale18 and a Supplemental Motion to Quash/Stop Auction
Sale.19 He also served upon the Sheriff a letter of protest. 20 All of these protest actions proved futile
as the Sheriff later submitted his Report dated March 30, 2004 informing the Labor Arbiter that he
had levied some of petitioners personal properties and sold them in an auction sale where
respondents were the only bidders. After each of the respondents entered a bid equal to their
individual shares in the judgment award, the levied properties were awarded to them.
Later, respondents claimed that although petitioners levied properties were already awarded to
them, they could not take full control, ownership and possession of said properties because
petitioner had allegedly padlocked the premises where the properties were situated. Hence, they
asked Labor Arbiter Castillon to issue a break-open order.21 For his part and in a last ditch effort to
nullify the writ of execution, petitioner filed a Motion to Quash Writ of Execution, Notice of Sale/Levy
on Execution of Personal Property and Auction Sale on Additional Grounds. 22 He reiterated that since
the NLRC Resolution which reversed the Decision of the Labor Arbiter ordered respondents
reinstatement without payment of backwages or other monetary award, only the execution of
reinstatement sans any backwages or monetary award should be enforced. It is his position that the

Writ of Execution dated March 9, 2004 ordering the Sheriff to collect respondents accrued salaries
of P1,110,665.60 plus P1,096.00 execution fees or the total amount of P1,111,761.60, in effect
illegally amended the said NLRC Resolution; hence, said writ of execution is null and void. And, as
the writ is null and void, it follows that the Labor Arbiter cannot issue a break-open order. In sum,
petitioner prayed that the Writ of Execution be quashed and all proceedings subsequent to it be
declared null and void and that respondents Urgent Motion for Issuance of Break Open Order be
denied for lack of merit.
Both motions were resolved in an Order23 dated June 3, 2004. Labor Arbiter Castillon explained
therein that the monetary award subject of the questioned Writ of Execution refers to respondents
accrued salaries by reason of the reinstatement order of Labor Arbiter Gan which is self-executory
pursuant to Article 22324 of the Labor Code. The Order cited Roquero v. Philippine Airlines Inc.25
where this Court ruled that employees are still entitled to their accrued salaries even if the order of
reinstatement has been reversed on appeal. As to the application for break open order, Labor Arbiter
Castillon relied on the Sheriffs report that there is imminent danger that petitioners properties sold
at the public auction might be transferred or removed, as in fact four of said properties were already
transferred. Thus, she deemed it necessary to grant respondents request for a break open order to
gain access to petitioners premises. The dispositive portion of said Order reads:
WHEREFORE, premises considered, the Motion to Quash Writ of Execution [and] Notice of
Sale/Levy on Execution Sale filed by the respondent(s) [are] hereby DENIED. In view of the refusal
of the respondents entry to its premises, Deputy Sheriff S. Diega of this Office is hereby ordered to
break-open the entrance of the premises of respondent wherein the properties are located.
For this purpose, he may secure the assistance of the local police officer having jurisdiction over the
locality where the said properties are located.
SO ORDERED.26
Undeterred, petitioner brought the matter to the CA through a Petition for Certiorari.
Proceedings before the Court of Appeals
Before the CA, petitioner imputed grave abuse of discretion amounting to lack or excess of
jurisdiction upon Labor Arbiter Castillon for issuing the questioned Writ of Execution and the Order
dated June 3, 2004. He maintained that since the December 21, 2001 Decision of Labor Arbiter Gan
has already been reversed and set aside by the September 5, 2002 Resolution of the NLRC, the
Writ of Execution issued by Labor Arbiter Castillon should have confined itself to the said NLRC
Resolution which ordered respondents reinstatement without backwages. Hence, when Labor
Arbiter Castillon issued the writ commanding the Sheriff to satisfy the monetary award in the amount
of P1,111,761.60, she acted with grave abuse of discretion amounting to lack or excess of
jurisdiction. For the same reason, her issuance of the Order dated June 3, 2004 denying petitioners
Motion to Quash Writ of Execution with Prayer to Hold in Abeyance Auction Sale and granting
respondents Urgent Motion for Issuance of Break Open Order is likewise tainted with grave abuse of
discretion. Aside from these, petitioner also questioned the conduct of the auction sale. He likewise
claimed that he was denied due process because he was not given the opportunity to file a motion
for reconsideration of the Order denying his Motion to Quash Writ of Execution considering that a
break-open order was also made in the same Order. For their part, respondents posited that since
they have already disposed of petitioners levied properties, the petition has already become moot.
In a Decision27 dated March 18, 2005, the CA quoted the June 3, 2004 Order of Labor Arbiter
Castillon and agreed with her ratiocination that pursuant to Article 223 of the Labor Code, what is

sought to be enforced by the subject Writ of Execution is the accrued salaries owing to respondents
by reason of the reinstatement order of Labor Arbiter Gan. The CA also found as unmeritorious the
issues raised by petitioner with regard to the conduct of the auction sale. Moreover, it did not give
weight to petitioners claim of lack of due process considering that a motion for reconsideration of a
Writ of Execution is not an available remedy. Thus, the CA dismissed the petition. Petitioners Motion
for Reconsideration28 suffered the same fate as it was also denied in a Resolution 29 dated June 16,
2005.
Hence, petitioner is now before this Court through this Petition for Review on Certiorari where he
presents the following issues:
1. Whether the provision of Article 223 of the Labor Code is applicable to this case x
x x.
2. Whether x x x the Decision dated March 18, 2005 and the Resolution dated June
16, 2005 of the Court of Appeals are contrary to law and jurisprudence[.]
3. Whether x x x the award of accrued salaries has legal and factual bases[.] 30
The Parties Arguments
Petitioner contends that the assailed Decision and Resolution of the CA are contrary to law and
jurisprudence. This is because in upholding the issuance of the questioned Writ of Execution for the
enforcement of respondents accrued salaries, said Decision and Resolution, in effect, altered the
NLRC Resolution which only decreed respondents reinstatement without backwages. Moreover, he
posits that Article 223 of the Labor Code only applies when an employee has been illegally
dismissed from work. And since in this case the NLRC ruled that respondents failure to continue
working for petitioner was not occasioned by termination, there is no illegal dismissal to speak of,
hence, said provision of the Labor Code does not apply. Lastly, petitioner claims that the
computation of respondents accrued salaries in the total amount of P1,110,665.60 has no legal and
factual bases since as repeatedly pointed out by him, the NLRC Resolution reversing the Labor
Arbiters Decision has already ordered respondents reinstatement without backwages after it found
that there was no illegal termination.
Respondents, on the other hand, maintain that the CA did not err in applying Article 223 of the Labor
Code to the instant case. They thus contend that the computation of their accrued salaries covering
the period during which they were supposed to have been reinstated or from January 1, 2002 to
January 30, 2004, should be upheld since same merely applied Article 223. In sum, respondents
believe that the assailed Decision and Resolution of the CA are in accord with law and
jurisprudence.
Our Ruling
The petition is not meritorious.
The core issue to be resolved in this case is similar to the one determined in Garcia v. Philippine
Airlines Inc.,31 that is, whether respondents may collect their wages during the period between the
Labor Arbiters order of reinstatement pending appeal and the NLRC Resolution overturning that of
the Labor Arbiter.

In order to provide a thorough discussion of the present case, an overview of Garcia is proper.
In Garcia, petitioners therein were dismissed by Philippine Airlines Inc. (PAL) after they were
allegedly caught in the act of sniffing shabu during a raid at the PAL Technical Centers Toolroom
Section. They thus filed a complaint for illegal dismissal. In the meantime, PAL was placed under an
interim rehabilitation receivership because it was then suffering from severe financial losses.
Thereafter, the Labor Arbiter ruled in petitioners favor and ordered PAL to immediately comply with
the reinstatement aspect of the decision. PAL appealed to the NLRC. The NLRC reversed the Labor
Arbiters Decision and dismissed petitioners complaint for lack of merit. As petitioners Motion for
Reconsideration thereto was likewise denied, the NLRC issued an Entry of Judgment. Notably, PALs
Interim Rehabilitation Receiver was replaced by a Permanent Rehabilitation Receiver during the
pendency of its appeal with the NLRC. A writ of execution with respect to the reinstatement aspect of
the Labor Arbiters Decision was then issued and pursuant thereto, a Notice of Garnishment was
likewise issued. To stop this, PAL filed an Urgent Petition for Injunction with the NLRC. While the
NLRC suspended and referred the action to the rehabilitation receiver, it however, likewise affirmed
the validity of the writ so that PAL appealed to the CA. Fortunately for PAL, the CA nullified the
assailed NLRC Resolutions on the grounds that (1) a subsequent finding of a valid dismissal
removes the basis for the reinstatement aspect of a labor arbiters decision and, (2) the impossibility
to comply with the reinstatement order due to corporate rehabilitation justifies PALs failure to
exercise the options under Article 223 of the Labor Code. When the case reached this Court, we
partially granted the petition in a Decision dated August 29, 2007 and effectively reinstated the
NLRC Resolutions insofar as it suspended the proceedings. But as PAL later manifested that the
rehabilitation proceedings have already been terminated, the court proceeded to determine the
remaining issue, which is, as earlier stated, whether petitioners therein may collect their wages
during the period between the Labor Arbiters order of reinstatement pending appeal and the NLRC
Resolution overturning that of the Labor Arbiter.
In resolving the case, the Court examined its conflicting rulings with respect to the application of
paragraph 3 of Article 223 of the Labor Code, viz:
At the core of the seeming divergence is the application of paragraph 3 of Article 223 of the Labor
Code which reads:
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned, shall immediately be executory, pending
appeal. The employee shall either be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in
the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement
provided herein.
The view as maintained in a number of cases is that:
x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher court. On the other hand, if
the employee has been reinstated during the appeal period and such reinstatement order is
reversed with finality, the employee is not required to reimburse whatever salary he received for he
is entitled to such, more so if he actually rendered services during the period.
In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is
entitled to receive wages pending appeal upon reinstatement, which is immediately executory.

Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order of
reinstatement and it is mandatory on the employer to comply therewith.
The opposite view is articulated in Genuino which states:
If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for
dismissal is valid, then the employer has the right to require the dismissed employee on
payroll reinstatement to refund the salaries s/he received while the case was pending appeal, or
it can be deducted from the accrued benefits that the dismissed employee was entitled to receive
from his/her employer under existing laws, collective bargaining agreement provisions, and
company practices. However, if the employee was reinstated to work during the pendency of the
appeal, then the employee is entitled to the compensation received for actual services rendered
without need of refund.
x x x x
It has thus been advanced that there is no point in releasing the wages to petitioners since their
dismissal was found to be valid, and to do so would constitute unjust enrichment." (Emphasis, italics
and underscoring in the original; citations omitted.)32
The Court then stressed that as opposed to the abovementioned Genuino v. National Labor
Relations Commission,33 the social justice principles of labor law outweigh or render inapplicable the
civil law doctrine of unjust enrichment. It then went on to examine the precarious implication of the
"refund doctrine" as enunciated in Genuino, thus:
[T]he "refund doctrine" easily demonstrates how a favorable decision by the Labor Arbiter could
harm, more than help, a dismissed employee. The employee, to make both ends meet, would
necessarily have to use up the salaries received during the pendency of the appeal, only to end up
having to refund the sum in case of a final unfavorable decision. It is mirage of a stop-gap leading
the employee to a risky cliff of insolvency.
Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to
refuse payroll reinstament and simply find work elsewhere in the interim, if any is available. Notably,
the option of payroll reinstatement belongs to the employer, even if the employee is able and raring
to return to work. Prior to Genuino, it is unthinkable for one to refuse payroll reinstatement. In the
face of the grim possibilities, the rise of concerned employees declining payroll reinstatement is on
the horizon.
Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also
institutes a scheme unduly favorable to management. Under such scheme, the salaries dispensed
pendente lite merely serve as a bond posted in installment by the employer. For in the event of a
reversal of the Labor Arbiters decision ordering reinstatement, the employer gets back the same
amount without having to spend ordinarily for bond premiums. This circumvents, if not directly
contradicts, the proscription that the "posting of a bond [even a cash bond] by the employer shall not
stay the execution for reinstatement. [Underscoring in the original]34
In view of this, the Court held this stance in Genuino as a stray posture and realigned the proper
course of the prevailing doctrine on reinstatement pending appeal vis--vis the effect of a reversal on
appeal, that is, even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it
is obligatory on the part of the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher court or tribunal. It likewise
settled the view that the Labor Arbiters order of reinstatement is immediately executory and

the employer has to either re-admit them to work under the same terms and conditions
prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to
exercise the options in the alternative, employer must pay the employees salaries.
The discussion, however, did not stop there. The court went on to declare that after the Labor
Arbiters decision is reversed by a higher tribunal, the employee may be barred from
collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement
pending appeal was without fault on the part of the employer. It then provided for the two-fold
test in determining whether an employee is barred from recovering his accrued wages, to wit: (1)
there must be actual delay or that the order of reinstatement pending appeal was not executed prior
to its reversal; and (2) the delay must not be due to the employers unjustified act or omission. If the
delay is due to the employers unjustified refusal, the employer may still be required to pay the
salaries notwithstanding the reversal of the Labor Arbiters Decision. In Garcia, after it had been
established that there was clearly a delay in the execution of the reinstatement order, the court
proceeded to ascertain whether same was due to PALs unjustified act or omission. In so doing, it
upheld the CAs finding that the peculiar predicament of a corporate rehabilitation rendered it
impossible for PAL, under the circumstances, to exercise its option under Article 223 of the Labor
Code. The suspension of claims dictated by rehabilitation procedure therefore constitutes a
justification for PALs failure to exercise the alternative options of actual reinstatement or payroll
reinstatement. Because of this, the Court held that PALs obligation to pay the salaries pending
appeal, as the normal effect of the non-exercise of the options, did not attach. Simply put, petitioners
cannot anymore collect their accrued salaries during the period between the Labor Arbiters order of
reinstatement pending appeal and the NLRC Resolution overturning that of the Labor Arbiter
because PALs failure to actually reinstate them or effect payroll reinstatement was justified by the
latters situation of being under corporate rehabilitation.
Application of the Two-Fold Test to the present case
As previously mentioned, the vital question that needs to be answered in the case at bar is: Can
respondents collect their accrued salaries for the period between the Labor Arbiters order of
reinstatement pending appeal and the NLRC Resolution overturning that of the Labor Arbiter? If in
the affirmative, the assailed CA Decision and Resolution which affirmed the June 3, 2004 Order of
Labor Arbiter Castillon denying the Motion to Quash Writ of Execution and ordering the break-open
of petitioners premises as well as the issuance of the subject Writ of Execution itself, have to be
upheld. Otherwise, they need to be set aside as what petitioner would want us to do.
To come up with the answer to said question, we shall apply the two-fold test used in Garcia.
Was there an actual delay or was the order of reinstatement pending appeal executed prior to its
reversal? As can be recalled, Labor Arbiter Gan issued his Decision ordering respondents
reinstatement on December 21, 2001, copy of which was allegedly received by petitioner on
February 21, 2002.35 On March 4, 2002, petitioner appealed said decision to the NLRC. A few days
later or on March 11, 2002, respondents filed an Ex-Parte Motion for Issuance of Writ of Execution
relative to the implementation of the reinstatement aspect of the decision. 36 On April 22, 2002, a Writ
of Execution was issued by Labor Arbiter Gan. However, until the issuance of the September 5, 2002
NLRC Resolution overturning Labor Arbiter Gans Decision, petitioner still failed to reinstate
respondents or effect payroll reinstatement in accordance with Article 223 of the Labor Code. This
was what actually prompted respondents to file an Ex-Parte Motion to Set Case for Conference with
Motion wherein they also prayed for the issuance of a computation of the award of backwages and
Alias Writ of Execution for its enforcement. It cannot therefore be denied that there was an actual
delay in the execution of the reinstatement aspect of the Decision of Labor Arbiter Gan prior to the
issuance of the NLRC Resolution overturning the same.

Now, the next question is: Was the delay not due to the employers unjustified act or omission?
Unlike in Garcia where PAL, as the employer, was then under corporate rehabilitation, Islriz Trading
here did not undergo rehabilitation or was under any analogous situation which would justify
petitioners non-exercise of the options provided under Article 223 of the Labor Code. Notably, what
petitioner gave as reason in not immediately effecting reinstatement after he was served with the
Writ of Execution dated April 22, 2002 was that he would first refer the matter to his counsel as he
could not effectively act on the order of execution without the latters advice. 37 He gave his word that
upon conferment with his lawyer, he will inform the Office of the Labor Arbiter of his action on the
writ. Petitioner, however, without any satisfactory reason, failed to fulfill this promise and
respondents remained to be not reinstated until the NLRC resolved petitioners appeal. Evidently, the
delay in the execution of respondents reinstatement was due to petitioners unjustified refusal to
effect the same.
Hence, the conclusion is that respondents have the right to collect their accrued salaries during the
period between the Labor Arbiters Decision ordering their reinstatement pending appeal and the
NLRC Resolution overturning the same because petitioners failure to reinstate them either actually
or through payroll was due to petitioners unjustified refusal to effect reinstatement. In order to
enforce this, Labor Arbiter Castillon thus correctly issued the Writ of Execution dated March 9, 2004
as well as the Order dated June 3, 2004 denying petitioners Motion to Quash Writ of Execution and
granting respondents Urgent Motion for Issuance of Break-Open Order. Consequently, we find no
error on the part of the CA in upholding these issuances and in dismissing the petition for certiorari
before it.
Having settled this, we find it unnecessary to discuss further the issues raised by petitioner except
the one with respect to the computation of respondents accrued salaries.
Correctness of the Computation of Respondents Accrued Salaries
Petitioner contends that respondents accrued salaries in the total amount of P1,110,665.60 have no
factual and legal bases. This is because of his obstinate belief that the NLRCs reversal of Labor
Arbiter Gans Decision has effectively removed the basis for such award.
Although we do not agree with petitioners line of reasoning, we, however, find incorrect the
computation made by Fiscal Examiner Trinchera.
In Kimberly Clark (Phils.), Inc., v. Facundo,38 we held that:
[T]he Labor Arbiters order of reinstatement was immediately executory. After receipt of the Labor
Arbiters decision ordering private respondents reinstatement, petitioner has to either re-admit them
to work under the same terms and conditions prevailing prior to their dismissal, or to reinstate them
in the payroll. Failing to exercise the options in the alternative, petitioner must pay private
respondents salaries which automatically accrued from notice of the Labor Arbiters order of
reinstatement until its ultimate reversal of the NLRC.
xxxx
x x x [S]ince private respondents reinstatement pending appeal was effective only until its
reversal by the NLRC on April 28, 1999, they are no longer entitled to salaries from May 1, 1999 to
March 15, 2001, as ordered by the Labor Arbiter. (Emphasis supplied)

To clarify, respondents are entitled to their accrued salaries only from the time petitioner received a
copy of Labor Arbiter Gans Decision declaring respondents termination illegal and ordering their
reinstatement up to the date of the NLRC Resolution overturning that of the Labor Arbiter. This is
because it is only during said period that respondents are deemed to have been illegally dismissed
and are entitled to reinstatement pursuant to Labor Arbiter Gans Decision which was the one in
effect at that time. Beyond that period, the NLRC Resolution declaring that there was no illegal
dismissal is already the one prevailing. From such point, respondents salaries did not accrue not
only because there is no more illegal dismissal to speak of but also because respondents have not
yet been actually reinstated and have not rendered services to petitioner.
Fiscal Examiner Trincheras computation of respondents accrued salaries covered the period
January 1, 2002 to January 30, 2004. As there was no showing when petitioner actually received a
copy of Labor Arbiter Gans decision except for petitioners self-serving claim that he received the
same on February 21, 2002,39 we are at a loss as to how Fiscal Examiner Trinchera came up with
January 1, 2002 as the reckoning point for computing respondents accrued wages. We likewise
wonder why it covered the period up to January 30, 2004 when on September 5, 2002, the NLRC
already promulgated its Resolution reversing that of the Labor Arbiter. Hence, we deem it proper to
remand the records of this case to the Labor Arbiter for the correct computation of respondents
accrued wages which shall commence from petitioners date of receipt of the Labor Arbiters
Decision ordering reinstatement up to the date of the NLRC Resolution reversing the same.
Considering, however, that petitioners levied properties have already been awarded to respondents
and as alleged by the latter, have also already been sold to third persons, respondents are ordered
to make the proper restitution to petitioner for whatever excess amount received by them based on
the correct computation.
As a final note, since it appears that petitioner still failed to reinstate respondents pursuant to the
final and executory Resolution of the NLRC, respondents proper recourse now is to move for the
execution of the same. It is worthy to note that Labor Arbiter Castillon stated in her questioned Order
of June 3, 2004 that the Writ of Execution she issued is for the sole purpose of enforcing the wages
accruing to respondents by reason of Labor Arbiter Gans order of reinstatement. Indeed, the last
paragraph of said writ provides only for the enforcement of said monetary award and nothing on
reinstatement, viz:
NOW THEREFORE, you are commanded to proceed to the premises of respondents Islriz
Trading/Victor Hugo C. Lu located at Brgy. Luciano Trece Martires[,] Cavite City or wherever it may
be found to collect the amount of One Million One Hundred Eleven Thousand Seven Hundred Sixty
One pesos & 60/100 (P1,111,761.60) inclusive [of] P1,096.00 as execution fees and turn over the
said amount to the NLRC Cashier for further disposition. In case you fail to collect the said amount in
cash, you are directed to cause the satisfaction of the same out of respondents chattels,
movable/immovable properties not exempt from execution. You are directed to return these Writ One
Hundred Eighty (180) days from receipt hereof, together with the report of compliance.
SO ORDERED.40
WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed March 18, 2005
Decision and June 16, 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 84744 are
AFFIRMED. The records of this case are ordered REMANDED to the Office of the Labor Arbiter for
the correct computation of respondents accrued salaries covering the date of petitioners receipt of
the December 21, 2001 Decision of the Labor Arbiter up to the issuance of the NLRC Resolution on
September 5, 2002. Respondents are ordered to make the proper restitution to petitioner for
whatever excess amount which may be

determined to have been received by them based on the correct computation.


SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
WE CONCUR:
RENATO C. CORONA
Chief Justice
Chairperson
PRESBITERO J. VELASCO, JR.
Associate Justice

TERESITA J. LEONARDO-DE CASTRO


Associate Justice

JOSE PORTUGAL PEREZ


Associate Justice
C E R TI F I C ATI O N
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the
above Decision had been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.
RENATO C. CORONA
Chief Justice

Footnotes
CA rollo, pp. 165-181; penned by Associate Justice Vicente S. E. Veloso and
concurred in by Associate Justices Roberto A. Barrios and Amelita G. Tolentino.
1

Id. at 198-199.

Rollo, p. 57-58.

Id. at 59-65.

Id. at 64-65.

See petitioners Notice of Appeal, Memorandum of Appeal and Joint Affidavit, id. at
66-71.
6

Id. at 83-92.

Id. at 91-92.

Id. at 93-95.

10

Id. at 96-98.

11

Id. at 99.

12

CA rollo, pp. 69-71.

13

Rollo, pp. 80-82.

14

Id. at 103.

15

Id. at 100-102.

16

Id. at 104-106.

17

Id. at 107.

18

Id. at 108-110.

19

Id. at 111-112.

20

Id. at 114.

21

Urgent Motion for Issuance of Break Open Order, id. at 116-119.

22

Id. at 120-124.

23

Id. at 126-132.

24

Labor Code, Article 223, par. 3 provides:


"In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either
be admitted back to work under the same terms and conditions prevailing
prior to his dismissal or separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the employer shall not stay
the execution for reinstatement provided herein."

25

449 Phil 437, 446 (2003).

26

Rollo, p. 132.

27

CA rollo, pp. 165-181.

28

Id. at 184-191.

29

Id. at 198-199.

30

Rollo, p. 13.

31

G.R. No. 164856, January 20, 2009, 576 SCRA 479.

32

Id. at 488-490.

33

G.R. Nos. 142732-33 & 142753-54, December 4, 2007, 539 SCRA 342.

34

Garcia v. Philippine Airlines Inc., supra note 31 at 491-492.

As alleged by petitioners in their Notice of Appeal, Memorandum of Appeal and


Joint Affidavit, rollo, pp. 66-71.
35

40

Rollo, p. 106.

36

Please see page 2 of the Writ of Execution dated April 22, 2002, id. at 80-82.

37

See Sheriffs Return, id. at 223.

38

G.R. No. 144885 (Unsigned Resolution), July 12, 2006.

39

Supra note 30.